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Design Thinking: a Bias-Reduction Strategy for Organizational Innovation

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Design Thinking: a Bias-Reduction Strategy for Organizational Innovation Design Thinking: A Bias-Reduction Strategy for Organizational Innovation Cognitive biases are unconscious assumptions that our mind uses to process the constant flow of information it receives, and can influence decision-making without us realizing it. Design Thinking allows companies to systematically focus on what matters most – improving the fundamental operations that lead to success. This paper talks about how cognitive biases affect business decisions and how Design Thinking can help overcome these biases for better, smarter decisions. Table of Contents Abstract ..................................................................................................................................... 3 Introduction ............................................................................................................................ 4 Defining Cognitive Bias................................................................................................... 5 Design Thinking and How It Works ......................................................................... 6 Disarming the Effect of Cognitive Bias ...................................................................7 • Confirmation Bias ...................................................................................................... 8 • IKEA Effect ..................................................................................................................... 9 • Anchoring Bias ...........................................................................................................10 • Availability Heuristic ................................................................................................11 • Attribution Bias ..........................................................................................................12 • Functional Fixedness ..............................................................................................13 • Framing Bias ...............................................................................................................14 Conclusion ..............................................................................................................................15 Authors Profile .....................................................................................................................16 2 < Back Abstract Cognitive biases affect nearly every choice we make. In the business world, we need to solve problems almost every hour, and these must be made without delay. No matter the industry, most organizations will eventually face a crisis – maybe new competitors will appear out of nowhere, or an existing brand will carve out a slice out of your customer base. To thrive in such an environment requires innovative solutions, and the solutions we make have broad, far-reaching consequences, which means that our ideas must remain rational, objective and free from potentially harmful cognitive biases. It’s easy to lose sight of the goal when solving problems that are based on emotional responses or incomplete information. So, is there a magic bullet that can help overcome biases and increase reliability of our problem- solving endeavor? As it turns out, there is no magic formula, but a creative problem- solving approach called Design Thinking that drives effective innovation endeavors. This paper explains how cognitive biases impede business growth and innovation, and how Design Thinking helps overcome this challenge by turning our attention to a number of business activities like sourcing inputs, managing customer relationships, developing effective digital interventions, and promoting better, more thoughtful, long-range strategies. 3 < Back Introduction We like to think that we’re rational problem solvers and decision makers. But in reality, the human mind organizes the information from the external environment into patterns where it prefers to derive judgement and solutions through use of mental shortcuts or Cognitive Biases. As problem solving is a complex cognitive process, our brains choose these shortcuts over rational thinking. Naturally then, when it comes to business decisions these biases negatively influence our or the organization’s capability to capture and utilize new ideas. Even at the workplace, we tend to act in irrational and unexpected ways when it comes to business decisions. This is because our thoughts are influenced by cognitive errors resulting from incomplete information, or the inability to analyze the information that is available without being affected by beliefs or mental conflicts. 4 < Back Defining Cognitive Bias While processing information, the self-organizing nature of mind often deploys mental shortcuts or heuristics which can lead us astray in our problem solving and creative endeavors. Essentially, cognitive biases are a slip in our thought process that is usually a result of the way mind uses shortcuts to organize information. Though this makes our everyday lives easier by constructing patterns that govern our thought and action, it also leads to cognitive errors in the way people process and analyze information, which can lead them to think irrationally and this can negatively impact business problem-solving and innovation. The main problem with cognitive biases is that they are not based on rational, systematic thinking. They are based on assumptions and stereotyping. And since they are unconscious and automatic, they can be difficult to identify and control. Let’s understand how a Design Thinking approach can help us better initiate effective and creative problem solving. 5 < Back Design Thinking and How It Works Design Thinking counters cognitive human biases that stifle creativity while addressing the challenges typically faced in creating world-class solutions. It requires seeing the organization as a collection of people motivated by different feelings and perspectives and emotions, and also includes customers and other stakeholders in problem definition and solution design. The best part is that Design Thinking gives a fluid, non-restrictive structure to the innovation process, encourages collaboration and focuses energies on the outcome. The main reason why Design Thinking works is that instead of asking for that one great idea or winning strategy, it asks people to come up with multiple ideas. This will prevent a person getting attached to any single idea and to avoid cognitive bias. The history of the business world is rich with tales of CEOs getting stuck to their idea, exaggerating the benefits, becoming passionate about the solution, looked for confirmations to support their idea and eventually failing. As we get attached to a single idea, biases set in blocking our ability to pay attention to other factors resulting in an unbalanced thinking. Any disagreements are then viewed as a personal affront and could impact the future cooperation of the team. Such as environment stifles innovation and open sharing of ideas, which obviously will impact the business in the long run. Design Thinking takes a multi-pronged approach to any situation. It views things from the customer’s perspective instead of being self- serving. It also encourages the thought that ideas, and not people, need to compete by asking for multiple ideas and solutions. This means building a multi-disciplinary team that supports a healthy exchange of ideas and knowledge. 6 < Back Disarming the Effect of Cognitive Bias The first step to overcoming cognitive biases is to admit their existence and accept that we have them. If we are familiar with our biases, we stand a better chance of noticing them as they come into play and avoid letting our decisions be influenced by then. The following section shows how Design Thinking helps in overcoming some of the important biases. Confirmation IKEA Anchoring bias Effect Bias Availability Attribution Functional Heuristic Bias Fixedness Framing Bias 7 < Back Confirmation Bias Confirmation bias is our tendency to fixate on any new information that confirms our pre-existing beliefs and ignore any data that could challenge these ideas. When we become attached to our beliefs, we tend to look for information that further validates them, simply because it’s easier to confirm that we’re right than it is to even think of another perspective. IT use case An organization wants to rethink its governance model to improve its stakeholder alignment. The project manager in charge of this project believes that timely reports will lead to better stakeholder alignment and hence, while analyzing causes of the issue, he may only look at the instances where problems occurred due to not receiving reports on time and focus the solution on how timely reports can be shared with relevant stakeholders. How can Design Thinking help change this? In Design Thinking, we start interacting with users to understand where the problem lies. In this case, by understanding the stakeholder universe and by conducting an empathy interview with each stakeholder group, the project team can better define the unmet needs of governance. They may uncover that the real problem is that the stakeholders feel a lack of connect due to inadequate face to face interactions. In addition to this, roles and responsibilities have not been defined well. Defining the problem holistically provides a strong foundation to transform the experience. This, when supported by ideation techniques like challenge assumptions, helps break a preconceived pattern of thinking while solving the problem which leads to a more holistic
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